The Moneychanger
Daily Commentary
Tuesday, 12 May a.d. 2015 Browse the commentary archive

Bursting of the bond bubble continues apace. Here's a chart, http://schrts.co/AY8INd of the German 10 year Bund. Yield has shot from 0.08% to 0.68% since 20 April. Losses on long positions are huge. Probably all those big speculators who had been buying European bonds expecting the ECB to buy them through QE, which they did, figured that negative rates signaled time to sell.

US bonds have "benefitted" from the selling wave, and there's a huge number of bonds to sell, thanks to the European selling. US 10 year treasury yield fell today after rising strongly yesterday, and wound up at 2.260%. 50 year bond yield did the same & ended at 3.020%, up from February's low at 2.226%. Both yields remain above the 200 DMA, so both are in rally mode, but that doesn't yet confirm the bubble has burst. Still, Bloomberg Business reports today that more than $450 billion has been wiped out in global bond markets in the past few weeks. No end in sight.

I keep trying to make the same point: it does stocks not a speck of good to rally 265 points one day, then give all that up the next two or three days. It only burns up buying power & sours investors. It also characterizes a topping market.

Today the Dow lost another 36.94 to close at 18,068.23. S&P lost 6.21 (0.29%) & ended at 2,099.12. This is portentous action, buzzards circling above. By the way, indices were down across the board. Dow in silver & Dow in Gold continue falling.

US dollar index hasn't stayed below 94 yet, but lost again today, 45 basis points, to fall 0.47% to 94.65.

Gold/US Dollar index spread has sustained its breakout from late April and continued to rise. This is the most positive event in the gold market.

Gold & silver keep coming back like the Energizer Bunny. Gold today grabbed back $9.40 to end at $1,192.60. Silver rose 21.2 cents to 1651c.

This is enough to make you bite your knuckles and tear your hair. Gold & silver wont rise through resistance (1680c & $1,200) but they also won't fall away to new lows. I think the public is getting tired of waiting as well as becoming afraid of the economy and markets, because our business picked up again today.

Markets today left me nervous. Interest rates are rising big time, which indicates failing confidence in central banks. May only be hedge fund money moving around, but if it gets out of hand panic will push folks into silver & gold. As I said above, no confirmation the bond bubble has burst yet, & undoubtedly tomorrow or next day the Fed criminals will be firing off the Blarney Cannon to try to contain panic. Still, I don't like it so I bought some gold and silver.

But then, I'm just a nat'ral born durned fool from Tennessee who ain't yet larnt to trust & respek my Washingtun & New York betters. They know what's best for us little people -- leastways, that's what they tell us.

Argentum et aurum comparanda sunt —
Silver and gold must be bought.

— Franklin Sanders, The Moneychanger

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Market Snapshot See more charts and market data
12-May-15 Price Change % Change
Gold, $/oz 1,192.60 9.40 0.79%
Silver, $/oz 16.51 0.21 1.30%
Gold/Silver Ratio 72.235 -0.363 -0.50%
Silver/Gold Ratio 0.0138 0.0001 0.50%
Platinum 1,132.40 6.00 0.53%
Palladium 785.15 4.70 0.60%
S&P 500 2,099.12 -6.21 -0.29%
Dow 18,068.23 -36.94 -0.20%
Dow in GOLD $s 313.18 -3.13 -0.99%
Dow in GOLD oz 15.15 -0.15 -0.99%
Dow in SILVER oz 1,094.38 -16.50 -1.49%
US Dollar Index 94.65 -0.45 -0.47%
IMPORTANT NOTE: The following are wholesale, not retail, prices. To figure our retail selling price, multiply the "ask" price by 1.035. To figure our retail buying price, multiple the "bid" price by 0.97. Lower commissions apply to larger orders, higher commissions to very small orders.
SPOT GOLD: 1,193.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,221.84 1,234.96 1,234.96
1/2 AE 0.50 608.02 629.41 1,258.83
1/4 AE 0.25 306.99 320.67 1,282.69
1/10 AE 0.10 125.18 130.66 1,306.55
Aust. 100 corona 0.98 1,162.56 1,171.56 1,195.22
British sovereign 0.24 282.99 295.99 1,257.37
French 20 franc 0.19 224.44 228.44 1,223.57
Krugerrand 1.00 1,206.33 1,216.33 1,216.33
Maple Leaf 1.00 1,201.20 1,217.20 1,217.20
1/2 Maple Leaf 0.50 686.09 626.43 1,252.86
1/4 Maple Leaf 0.25 304.27 319.18 1,276.72
1/10 Maple Leaf 0.10 126.48 130.06 1,300.59
Mexican 50 peso 1.21 1,428.45 1,439.45 1,193.87
.9999 bar 1.00 1,197.38 1,205.20 1,205.20
SPOT SILVER: 16.52      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 23.00 26.00 33.99
VG+ Peace dollar 0.77 18.50 21.00 27.45
90% silver coin bags 0.72 12,383.80 12,741.30 17.82
US 40% silver 1/2s 0.30 4,681.65 4,831.65 16.38
100 oz .999 bar 100.00 1,642.00 1,692.00 16.92
10 oz .999 bar 10.00 164.20 169.70 16.97
1 oz .999 round 1.00 16.62 17.12 17.12
Am Eagle, 200 oz Min 1.00 18.02 18.87 18.87
SPOT PLATINUM: 1,132.40      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,147.40 1,177.40 1,177.40
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Warnings and Disclaimers

To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary trend is up, targeting 16:1 gold/silver ratio or $195.66; stock's primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold or 16 ounces of silver. US$ and US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down.

Be advised and warned:

  • Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short-term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures.
  • NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps.
  • NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced.
  • NOR do I recommend buying gold and silver on margin or with debt.
  • What DO I recommend? Physical gold and silver coins and bars in your own hands. For additional information, please see our Ten Commandments for Buying Gold and Silver.
  • One final warning: NEVER insert a 747 Jumbo Jet up your nose.

Explanation of Terms

The US DOLLAR INDEX is the average exchange rate for the US dollar against the Euro, Yen, Pound sterling, Canadian Dollar, Swiss Franc, and Swedish Krona, weighted for each country's trade with the US. It gives a general measure of the US dollar's performance against all other currencies.

The DOW IN GOLD DOLLARS measures the Dow Jones Industrial Average in gold dollars (0.048375 troy oz. by law). The DiG$ depicts the Primary (20 year) Trend of stocks against gold. When the DiG$ is dropping, gold is gaining value against stocks in a trend that should last 15-20 years. The DiG$'s chart is identical to the Dow in ounces of gold, but gives us one unvarying measure all the way back to 1896. Because it shows the primary trend ("tide") of gold against stocks, for investors it is the single most important financial chart in the world today. Since its August 1999 high at G$925.42 (44.8 ounces), the DiG$ has trended down, targeting a G$80-G$20 (4-1 oz. of gold will buy the whole Dow).

The DOW IN SILVER OUNCES shows how many ounces of silver are needed to buy the entire Dow. The DiSoz is trending down with a target of under 36 ounces.

The GOLD/SILVER RATIO is the gold price divided by the silver price, and shows how many ounces of silver it takes to buy one ounce of gold. The Ratio shows us the Primary (20 year) Trend of gold's value against silver. When the Ratio's trend is dropping, silver is gaining value against gold. This trend targets a gold/silver ratio of 16 ounces of silver to one of gold within the next 5-10 years. That implies that silver will massively, vastly outperform gold before this bull market ends. When both metals are rallying, the ratio often (but not always) drops, confirming the rally.

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